Could these 2 top growth stocks make you a millionaire?

Finding stocks which are able to deliver high growth rates is never easy. However, unearthing them at a time when share prices are relatively high makes the task even more challenging. Despite this, there are still stocks trading on valuations which indicate they could boost your portfolio’s performance. In some cases, they could even help you on your path towards becoming a millionaire. Do these two stocks fall into that category?

Encouraging progress

The market for learning technologies is growing. In the long run, it could continue to offer above-average growth prospects as the learning industry gradually becomes increasingly…

Keep Reading

Register by giving us your email below to continue reading all of the content on the site. Soon you will also begin to receive our FREE email newsletter, The Motley Fool Collective. It features straightforward advice on what’s really happening with the stock market, direct to your inbox. It’s designed to help you protect and grow your portfolio. (You may unsubscribe any time.)

We will use your email address only to keep you informed about updates to our web site and about other products and services that we think might interest you. The Motley Fool respects your privacy! Please read our Privacy Statement.

Finding stocks which are able to deliver high growth rates is never easy. However, unearthing them at a time when share prices are relatively high makes the task even more challenging. Despite this, there are still stocks trading on valuations which indicate they could boost your portfolio’s performance. In some cases, they could even help you on your path towards becoming a millionaire. Do these two stocks fall into that category?

Encouraging progress

The market for learning technologies is growing. In the long run, it could continue to offer above-average growth prospects as the learning industry gradually becomes increasingly digital. As such, companies operating within the sector, such as Learning Technologies (LSE: LTG), could enjoy a tailwind.

It reported encouraging full-year results on Wednesday. Its revenue increased by 42%, while recurring revenues were 170% higher. Furthermore, it was able to increase its exposure to non-UK economies at a time when the UK is experiencing an uncertain future. This could prove to be a shrewd move and may allow the business to take advantage of weaker sterling in future.

The acquisition in January 2016 of Rustici Software has thus far proved to be highly successful, with its performance ahead of expectations. It has also recently acquired NetDimensions, which could have a further positive impact on its financial performance. And with greater use of the company’s blended service strategy, its organic growth rate looks set to remain strong in future years.

With earnings growth of 16% forecast for the current year, Learning Technologies has a price-to-earnings growth (PEG) ratio of just 1.7. This indicates that its shares could rise and help you to generate a seven-figure portfolio.

Income and growth potential

Also operating within the digital services segment is Kainos(LSE: KNOS). Surprisingly for a technology company, its income prospects are relatively bright. It currently yields around 2.4%, but is expected to increase dividends per share at an annualised rate of 14% over the next two years. However, this will still leave it with sufficient capital to reinvest for future growth, since the company’s dividend coverage ratio is expected to be upwards of 1.7 in the next financial year.

The reason for such a high coverage ratio is partly due to the growth forecasts for the business. Its bottom line is expected to increase by 6% in the current year, and then by 23% next year. Despite such a positive outlook, its shares trade on a PEG ratio of only 0.8. This seems difficult to justify when the company has a bright outlook and looks set to reward its shareholders by paying a rapidly increasing dividend.

Clearly, there is no guarantee that Kainos will make you a millionaire. But its shares seem to offer a wide margin of safety, as well as improving income prospects. Therefore, they could improve your portfolio performance and help you to achieve seven-figure status.

And what about Brexit?

As Brexit gets ever closer, fear and indecision could hurt share prices to an increasing extent. That's why the analysts at The Motley Fool have written a free and without obligation guide called Brexit: Your 5-Step Investor's Survival Guide.

Click here to get your copy of the guide - it's completely free and comes without any obligation.

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Looking for a low-cost Share Dealing service?

Our preferred partner, interactive investor, offers all the knowledge, tools and information you need to be a confident investor. Whether you’re looking for an everyday trading account or to make the most of your ISA allowance they provide great value for money, through simple, fair and clear charges, so it’s easy to work out what it costs to invest.